01/02/2012

Investors should go long on energy stocks and short on healthcare shares, as the broad market's medium-term bullish reversal is going to favour cyclical sectors, Paris-based technical analysis firm Day-by-Day recommends.

"It is indeed time to move away from defensive stocks. We have already recommended an 'overweight' allocation on banks and techs," Day-by-Day head Valerie Gastaldy says.

Shares in Fresenius Medical Care fall 1.1 percent in robust volume, extending losses into a fourth straight session and underperforming a 0.2 percent rise for the European healthcare sector, after the world's largest dialysis company reports slightly disappointing earnings.

The introduction of a new reimbursement system in the United States, designed to encourage clinic operators to reduce costs and use drugs more sparingly, resulted in lighter-than-expected U.S. revenue per treatment for the German group, JPMorgan says.

A steep sell-off in Portuguese equities has opened opportunities for the risk-seeking investor to cheaply cash in on high dividends or gain exposure to fast growing emerging markets, while avoiding domestic-focused stocks.

After sinking 28 percent in 2011, the benchmark Lisbon stocks index, PSI-20, has risen 5.5 percent since the start of February, outperforming a 4.3 percent increase on the pan-European FTSE Eurofirst 300 and heading for its first monthly gain in a year.

European shares traded lower at midday on Thursday as Greece faced further hurdles in its efforts to secure a bailout, raising the spectre of a chaotic default that would aggravate the euro zone debt crisis.

European authorities delayed a decision on the second aid package for Athens until Monday at the earliest and EU sources said the option of postponing part or all of the rescue deal until after Greek elections was being considered.

European stocks were up around midday on Tuesday, reversing early losses as data showing German analyst and investor sentiment rising to a level not seen since last April eclipsed Moody's downgrade of six euro zone countries.

Implied volatility gauges for the euro zone's Euro Stoxx 50 > and Germany's Xetra Dax indexes are set to decline further as they still trade at "expensive" levels despite hefty falls so far this year, says Valerie Gastaldy, head of Paris-based technical analysis firm Day-by-Day.